International Pearson Edexcel A level Business 231 1 PLANNING V2.pptx

a) Content of a business plan
b) Relevance and uses of a business plan

1. Edexcel International A Level Business 2.3.1 Planning a business and raising finance 1 PLANNING

2. From the specification a) Content of a business plan b) Relevance and uses of a business plan

3. You will need worksheet 231.1 Planning for this lesson

4. Starter Where do you want to be in 3 years time? In 10 years? In 30 years? How important to you is your plan? Do you think businesses need a plan?

5. Content of a business plan

6. What is a business plan? A document which sets out the future plans for a business It is how a business owner will explain how they will turn their idea into a successful business The owner may then show the plan to a bank or another investor to ask for finance to help the business set-up, grow and expand

7. What goes into a business plan? Name of the business (Cutting Crew or curl up and dye for hairdressers) Product or service and the market it is aimed at 4 Ps of marketing Human resources; who will be working there, managers, owners etc. Production costs and potential suppliers of materials Premises and how it will be financed; rent, mortgage, bought outright, leased from counci l Financial information; Forecast revenue, costs and a cash-flow forecast

8. Relevance of a business plan in obtaining finance

9. Why does a business write a business plan? To persuade investors that the business will make enough profit to be able to pay back interest and loan capital on any finance taken out To attract potential investors to the business To give the owners some direction because once the plan is written down it is more likely to be followed

10. Business plan: To help set up a new business A business plan will help an entrepreneur to decide what resources they need to start the business; Human resources; For example the staff needed for a clothes shop Equipment; For example scissors and a sewing machine Raw Materials; for example cloth or lace Technology: for example the till or business computer Vehicles; for example the company van

11. A business plan may help to obtain finance from venture capitalists, banks, angel investors, or even family members The lenders are going to want to see financial forecasts that show the business will grow and that they can make a profit The better the financial information, the more confident they will be in investing, this will reduce the risk for the investors Business plan: To help the business raise finance

12. A business plan may help the business to negotiate a lower rate of interest on a bank loan Alternatively the business plan may help the owner to negotiate a lower percentage of equity (share) that will be given to the venture capitalists or angel investors Why would a business owner want a lower rate of interest? Business plan: to negotiate better rates of interest on finance

13. Business plan: To help the business to set objectives A business plan can show how a business aims to achieve its goals For example it may show any planned activities of the business e.g. a launch night for a new restaurant It should also show any potential investors what amount of sales and profit the business aims to achieve

14. A business plan should set targets (SMART) and objectives that can be followed for the business The business owner can then monitor if they are meeting their objectives The business plan may also set out how the company aims to grow and develop in the future Business plan: SMART objectives

15. Business plan: To outline how functions of the business will be organised The business plan may show how many staff and location of the following departments: Production Marketing Purchasing Human Resources Accounting and Finance Would this be the same format for a small sole trader business?

16. Plenary Quiz Identify if these are true or false reasons to write a business plan: To help set up a new business To help the business raise finance To help the business to set objectives To outline how functions of the business will be organised

17. Plenary Quiz Answers To help set up a new business TRUE To help the business raise finance TRUE To help the business to set objectives TRUE To outline how functions of the business will be organised TRUE

18. Case study for question 1

19. Sample question 1 Knowledge 2

20. Answer to sample question 1

21. Case study for question 2

22. Sample question 2 Knowledge 2 Application 2 Analysis 2

23. Answer sample question 2

24. Glossary Business plan ; A document that sets out the future objectives and strategies of a business Investor ; A person or organisation that puts money into a business with the expectation of receiving a reward e.g. interest payments Venture capitalists; An investor company that provides new businesses with finance in exchange for equity (a share) in the company Angel investors ; A wealthy individual that invests their own money into a business in in exchange for a minority share in the business